Australia drawn into global forex rigging probe - report

Chris Jenkins and wires

Australia is about to be drawn into the growing international investigation into alleged rate rigging in the $US5.3 trillion-a-day global foreign exchange market, with the corporate regulator launching what is expected to be at least a year long probe, Britain's Financial Times has reported.

Investigators in Europe, the US and Asia have been probing banks and currency traders to examine whether they colluded to manipulate the price of currencies on international money markets.

Australian Securities and Investment Commission chief Greg Medcraft told the FT that the regulator was aware of developments in foreign investigations through co-operation with its international peers.

"We are commencing a review to ascertain whether any misconduct relating to foreign exchange trading may have occurred in Australia, and whether from an Australian perspective ASIC has concerns about the foreign exchange market," Mr Medcraft said.

In the US, allegations of forex rate rigging are being investigated by both the US Securities and Exchanges Commission and the Commodity Futures Trading Commission.

Bank of England governor Mark Carney has described the investigations as being as serious as those in the Libor (London Interbank Offered Rate) rate rigging scandal of 2012, which rocked the financial industry.

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Any rigging on international currency markets could have profound consequences throughout the global economy.

"Any corporation with global operations has to hedge currencies using futures and swaps," Columbia University securities law professor John Coffee told Bloomberg last week. "If the FX market is manipulated, it can create a loss that is passed on to the consumer and shareholders."

The FT reported that multibillion dollar fines are expected to be levied on banks as a result of the global investigation. To date 25 bank staff had either been suspended, placed on leave or dismissed as a result of the investigations, it said.

Barclays, HSBC and Royal Bank of Scotland have all confirmed that they are part of the ongoing forex market investigations, which have also seen a Bank of England employee suspended.

Deutsche Bank, Swiss lender UBS and US pair Citi and JPMorgan Chase have also revealed that they are co-operating with regulators over the affair.